Ladies and Gentlemen,
It is a pleasure for me to have this opportunity to speak to you at this conference. In particular, I would like thank the organizers of Euromoney for inviting me to share my perspective on Thailand at this crucial moment. For people here, the timing of the Conference may coincide with the Tenth Anniversary of the change-over but for us Thais, it marks the Tenth Anniversary of the Asian financial crisis.
Ten years on, while we have mostly recovered from that crisis, there has been two further lost years where we have been mired in political conflict. Meanwhile, the world has not stopped turning and other countries are making progress, making economic advances and in improving living conditions for their people. Thailand has lost ground.
This is not abstract to my countrymen. As I travel around my country, I am struck by the conversations with Thais who are frustrated that wages are stagnant while living costs continue to rise; frustrated that the economy seems to be on hold until our political problems get sorted out; and frustrated that violence in the South is eroding confidence.
The real problem in Thailand is this. For too long, the average Thai has been cast aside as a low priority. Up until last September, a wave of corruption siphoned off too much of Thailand’s wealth and potential, so that a very few enjoyed staggering gains, while the majority barely got by. Then, since September, the needs of the people have been put on hold again, as an undemocratic military-installed government has focused more on politics, while moving only very slowly to address problems in the economy, problems with education, problems with poverty, and problems with violence in our South.
This is a crucial moment for Thailand, when we must put the people first. Even as we discuss macroeconomic matters today, my thoughts are on the micro-frustrations that define the lives of far too many Thais. My own resolution, and that of the party I lead, is to pursue an agenda – a People’s Agenda – which puts the people and their frustrations first, and works to achieve quicker progress.
To me, there are three vital frustrations in particular that demand our attention and action; and the Democrat Party - as the oldest political party in Thailand - is determined to make sure that we succeed in these tasks. They are first, the restoration of democracy, second, economic revival, and third, the end of unrest in the South.
First, democracy. Today, the Constitution Drafting Assembly will make a final vote on the draft Constitution, another significant step towards the restoration of democracy. The draft will then be put to a referendum on August 19th. While there are imperfections in the draft, many feel it is good enough to move the country towards elections, possibly as early as November. If, however, in the less likely event that the Thai people were to reject the draft, the military and the government would have to respond by approving another Constitution within a month. In either case, we should have a Constitution that will allow our democracy to get back to work with elections held by the end of the year. The Prime Minister has promised as much and my Party would certainly do whatever we can to ensure that this is so.
But the Constitution itself is not enough, democracy is about choice. We welcome political competition and we want the elections at the end of the year to be meaningful. If the coup leaders have any political ambitions, we urge them to run in the elections. We are willing and happy to face the competition from them as well as from members of Thaksin’s party– the Thai Rak Thai whom we expect to regroup soon. We only ask for free and fair elections which the Electoral Commission and the Government must deliver.
Why have I placed democracy at the top of the agenda? Because I do not think the key problems facing the country - namely the unrest in the South, or the economic problems – could be solved otherwise. A regime that does not have representatives in the Deep South cannot hope to resolve a crisis which runs deep in the minds of local people and divides the local communities. There is also no way that we can regain confidence, or even respect that is needed from the investors’ community – foreign and local – unless democracy returns.
The Democrat Party under my leadership, if tasked with leading the country, will also place good governance as part of the reborn Thai democracy. This means integrity in running the affairs of government. No conflict of interests, no cronyism, no favouritism. The business community can be assured that there will be a level playing field. There will be no questions about our being part of the global democratic process and part of the global market economy.
It is difficult to discuss Thailand’s economic future without reference to the 1997 Asian Financial Crisis. Although we have clearly recovered from the dire macro economic crisis of the time, in many ways, we remain encumbered by the events of 10 years ago.
When the Baht collapsed on July 2nd 1997, our exporters became doubly more competitive over night. Since then exports as a percentage of our GDP has risen from under 30% to almost 70% today. Unfortunately, it appears that the increase has been a result of a weaker currency as opposed to efficiency. Arguably, in fact, we have missed an important opportunity to achieve genuine reform. The way much of our business is done today is not strikingly different from 10 years ago. As a Party leading the government from 1997 -2001, we had initiated a series of reforms; from public sector reform, banking reform, to telecom reform as well as creating a broadly more competitive environment. Sadly, not much of that was carried on by subsequent governments. The macro economic picture for Thailand may be sound, but the wealth generating capability of the private sector and of the Thai individuals remain unrealized. The average Thai continues to be frustrated.
It is time to go back to the basics, to increase the quality and efficiency of all factor inputs: labour, resources, capital and technology. Twenty years ago, when Thailand emerged as a Newly Industrialized Country, we had cheap labour as a competitive edge. Today, labour cost in Thailand is more expensive than Vietnam or China but labourers in Thailand remain stuck in poverty – a sure sign that productivity has increased too slowly and that higher wages have not kept up with increasing cost of living. The solution is straightforward – education including research and development. It is time for us to make sure that our educational system caters to the needs of a modern, open society. That means greater emphasis on language skills and greater emphasis on vocational training. My Party’s highest priority is to achieve a quantum leap in the quality and accessibility of our schools. We will make secondary education free to all Thai children, including covering the daily school expenses for things like textbooks and supplies for those who cannot afford those costs.
Our use of resources must be drastically improved. We are Asia’s biggest importer of fossil fuel relative to the size of our economy. Oil imports are now 16% of GDP. We can no longer afford to waste both time and fuel in traffic jams. It is time to extend our transportation network. We are almost entirely dependent on trucks to transport goods.
Our intention is to invest heavily to create a multi-modal transport network with a view to reduce logistics costs from almost 20% to below 15% within four years.
In agriculture, we may be one of the very few net exporter of food but we can achieve so much more. Significant productivity improvement can be made through better management of land usage and water and so much more value can be created through processing and new products. We intend to use many of our agricultural produce – tapioca and cane sugar for instance – for the production of alternative fuel. In doing so, many business opportunities will arise. This development will have a threefold achievements – better environment, less reliance on imported energy and higher incomes for our farmers.
The ample reserves which we have accumulated, the continuing strong trade and current account surpluses, the relatively low public debt to GDP make me confident that such investments in the country’s future can be done without compromising economic prudence and stability.
We can achieve so much more too regarding Capital and Technology. We just need to face up to our need for FDI and adjust our policies accordingly. We firmly believe that FDI and other long term foreign capital are one of the biggest contributors to rising productivity. It also means jobs and higher wages and a better quality of life for our people.
One of our intentions to facilitate investment, is to further develop our capital markets, both debt and equity. You know very well that the size of the Thai debt market relative to GDP at 36% is half of what it should and could be, while the equity market is also trading below its potential.
Our aim is not only to see a full recovery of the Thai economy, but to make certain that Thailand’s economic revival is built on solid foundations.Thailand’s upcoming economic revival must be as sustainable as it is strong.
I am confident that with the upcoming elections, Thailand will see a quick recovery in both domestic and international confidence leading to increasing consumption and investment, which will spur a stock market rally – so that you all may finally take advantage of our undervalued stocks, if you haven’t already done so in the last few days.
For us, the Democrat Party, we will utilize this upturn in confidence in the following manner.
First, we will act and act fast. As a political leader, I am as frustrated as most of you who think that we are losing opportunity. Thailand does not have any more time to lose, the economy must move forward. Every little time we lose means the loss of opportunity for our people.
Second, we will send the right signals to the world, to create confidence among the international community. A number of steps taken by the current government must be reviewed. The capital controls, the Foreign Business Acts amendment – these policies are simply not appropriate for the country in this age.
We will be clear to the global community that we are ready for trade, investment and exchanges. We will face up to the challenge.
Thailand has always thrived on having one of the most open economies. This has allowed us to be one of the fastest growing economies for two to three decades – and we intend to stick to that path.
Third, we as policymakers will focus more on long-term investment. We must be brave to think and to act to revive the economy, but we must also be brave to push the economy forward in a more sustainable path.
Finally, we will ensure that economic growth will be an economic growth for all. The approach is one of openness but openness that can be linked to the well-being of the ordinary people.
As for the South, for us Democrats, we believe that the current reconciliation approach is the right one; unfortunately it is not being implemented effectively. Through better management and coordination, we will employ dedicated resources for this task and will also take the following actions.
First, we believe that there can be no peace without justice. We will face up to the injustices of the past committed by the state and take the appropriate steps to win back trust from the local communities.
Second, we will promote lasting peace in the area through enhancing economic and education opportunities. The Southern provinces are well positioned to take advantage of economic links with the Middle-East and with the rest of the Muslim world
Let me reiterate the three tasks that we have set out for Thailand’s future, democracy, economic revival and peace in the South. The message I am taking to you here is the same message that we are tirelessly taking to our people in all of Thailand, to win their hearts and minds, and their support. I am confident that the Thai people will stand behind this People’s Agenda.
Believe me; once we have the opportunity, we have the political will to carry through these tasks for a better and brighter future for Thailand, a future in which I invite you all to be a stakeholder.